Donohoe and Chambers set to reveal budget

By Cillian Sherlock, PA

The Government will outline its annual budget on Tuesday, amid scrutiny of its tax and expenditure priorities.

It has set parameters for a planned package of €9.4 billion in Budget 2026, including €7.9 billion in additional public spending and €1.5 billion envelope for tax measures.

The Central Bank, Irish Fiscal Advisory Council (IFAC), and Economic and Social Research Institute (ESRI) have raised concerns about the risk of the planned budget package overheating the economy.

Finance Minister Paschal Donohoe and Public Expenditure Minister Jack Chambers will attempt to allay those fears as they reveal the budgetary measures in the Dail parliament from 1pm.

Certain features of the budget have already been well trailed, with Mr Donohoe outlining that there will be no changes to personal taxes, adding that indexation would have taken up the majority of overall the tax package.

It is expected, however, that the Government will move to cut VAT for food-led hospitality from 13.5 per cent to 9 per cent, after a long-running campaign for a sector which has sought to highlight a rising cost of business.

Businesses say the proposal, which will exclude accommodation and is expected to kick in in July rather than January, is necessary to protect jobs.

The Government is also expected to announce a VAT cut for new-build apartments in an effort to drive delivery of housing.

Elsewhere on housing, ministers have highlighted the importance of the renters’ tax credit, which would be due to expire if not extended on Tuesday.

However, in the first budget since the election returned Fianna Fáil and Fine Gael to Government, coalition figures have warned that there will be no repeat of a bumper cost-of-living package containing other “one-off” universal measures such as energy credits.

The Government has instead said its approach will focus on more targeted and permanent measures.

Students will be looking to see if there is any permanent cut to student fees, although any reduction below €1,000 may be seen as a year-on-year increase after a temporary cut of that amount expires.

Another closely watched measure is the extent of an increase to core social protection rates, with a Christmas bonus also regularly featuring in recent budgets.

Amid regular budget staples like a duty increase for cigarettes, moves to make a trialled scheme of basic income for artists more permanent could also feature.

At the conclusion of the ministers’ speeches, opposition parties – who have set out their own alternative budgets in the preceding week – will have the opportunity to respond and critique the coalition’s plan for the year ahead.